Are Jardine Matheson Holdings Limited’s Valuations High Or Low Compared To History?

Jardine Matheson Holdings Limited (SGX: J36) is a blue chip stock in Singapore’s market given that it is one of the 30 components that make up the local market barometer, the Straits Times Index (SGX: ^STI). It can also be said to be a bona fide conglomerate.

That’s because it has substantial interests (either direct or indirect) in other Singapore-listed companies such as pan-Asian retailer Dairy Farm International Holdings Ltd (SGX: D01), vehicles distributor Jardine Cycle & Carriage Ltd (SGX: C07), the Hong Kong-focused real estate investor Hongkong Land Holdings Limited (SGX: H78), international hotelier Mandarin Oriental International Limited (SGX: M04), and fellow conglomerate Jardine Strategic Holdings Limited (SGX: J37).

Over the last 12 months, Jardine Matheson has been one of the best-performing blue chips given that its stock price is up by some 18%. Given this strong performance, I thought it would be interesting to look at the conglomerate’s current valuations and compare them with history.

The valuation metrics I want to focus on here are the price-to-book (PB) ratio and price-to-earnings (PE) ratio.

Here’s a chart showing Jardine Matheson’s PB ratio over the past five years:

Jardine Matheson's PB ratio over past 5 years
Source: S&P Global Market Intelligence

We can see that Jardine Matheson’s current PB ratio of 1.1 is in the middle of where the valuation measure has been for the timeframe under study. In the past five years, the conglomerate’s PB ratio has traded between 1.4 and 0.8.

In the next chart below, we have Jardine Matheson’s PE ratio over the past five years:

Jardine Matheson's PE ratio over past 5 years
Source: S&P Global Market Intelligence

The conglomerate’s PE ratio is in a similar situation as the PB ratio. The PE ratio for Jardine Matheson Holdings has ranged between 4.3 and 16.7 in the past five years. Right now, the company has a PE ratio of 12.2, which is in the middle-range of things.

So, on the whole, when compared to history Jardine Matheson  has an average PB ratio and PE ratio.

In any case, it’s worth keeping in mind that none of the above is meant to be the final word on whether Jardine Matheson will be a good or bad investment going forward.

At the end of the day, valuation ratios are only one of many aspects about a company that investors should consider before making an investment decision. Other qualitative factors such as a company’s future growth potential and quality of management must also be taken into account.

Take the data you’ve seen here merely as a useful starting point for further research.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Dairy Farm International and Hongkong Land Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.